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Talisman Energy (TLM) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Talisman Energy ( TLM) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Talisman Energy as such a stock due to the following factors:

  • TLM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.5 million.
  • TLM has traded 2.9 million shares today.
  • TLM traded in a range 202.8% of the normal price range with a price range of $0.47.
  • TLM traded above its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in TLM with the Ticky from Trade-Ideas. See the FREE profile for TLM NOW at Trade-Ideas

More details on TLM:

Talisman Energy Inc., an upstream oil and gas company, engages in the exploration, development, production, transportation, and marketing of crude oil, natural gas, and natural gas liquids. The stock currently has a dividend yield of 2.6%. TLM has a PE ratio of 117.2. Currently there are 4 analysts that rate Talisman Energy a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Talisman Energy has been 4.0 million shares per day over the past 30 days. Talisman Energy has a market cap of $10.9 billion and is part of the basic materials sector and energy industry. Shares are down 8.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Talisman Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:

  • TLM has underperformed the S&P 500 Index, declining 15.03% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • Despite currently having a low debt-to-equity ratio of 0.59, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.45 is very low and demonstrates very weak liquidity.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TALISMAN ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • TALISMAN ENERGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, TALISMAN ENERGY INC swung to a loss, reporting -$0.02 versus $0.31 in the prior year.
  • TLM, with its decline in revenue, underperformed when compared the industry average of 1.9%. Since the same quarter one year prior, revenues fell by 28.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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